Stock Market Indices (+)

The German DAX-40

(Deutscher Aktienindex)

Introduced in late 1987, DAX is the most important German stock market index. DAX includes the 40 largest companies listed on the Frankfurt Stock Exchange and it is a blue-chip stock market index. The DAX works as a performance index, meaning that the dividends of the listed companies are accounted as reinvested capital. The performance of the DAX can be seen as a key indicator for the development of the German and the European economy.

Highlights

1. DAX (Deutscher Aktienindex) is considered a barometer index for the German economy
2. DAX is the successor to the Börsen-Zeitung index, which was founded in 1959
3. The base value for the DAX is 1,000, and the base date is 30 December 1987
4. The Weighting method for the DAX is the capitalization-weighted
5. The German Xetra technology calculates the index after every 1 second since the start of 2006
6. The companies of the DAX account for approximately 80% of the total value on the Frankfurt Stock exchange
7. Trading hours: from 9:00 a.m. to 5:30 p.m. CET
8. The P/E ratio of the index in early 2024 is x14.8 (the 3-year average PE is x18.3x)
9. The dividend yield of the DAX 30 in early 2024 was 2.50%

DAX is characterized by large and dynamic swings in both directions. The performance of the DAX is generally aligned with the American Markets.

History

The DAX is one of the most important stock indices in the world. Since 1988, the DAX has followed the development of the 40 largest German listed companies (previously 30).

• The first official reading of the index was 1,163.52 and dated July, 1st 1988
• Since 1988, the index achieved an average annual return of over 7%
• The DAX represents around 80% of the total stock market capitalization in Germany
• Deutsche Telekom IPO was the largest IPO in the history of the German stock market (1996) with €13 billion
• The MDAX includes 50 stocks from classic sectors (previously 60)
• The SDAX® index includes the 70 next-biggest companies
• The TecDAX® was introduced in 2003 and includes the stocks of 30 key German technology companies
• There are 11 ETFs on the DAX, managing more than 14 billion euros

Composition of the DAX-40

This is the composition of DAX (mid-2023):

Sector Allocation

Chemicals (15.91%) is the largest sector, followed by the Industrial (15.16%), Automobile (10.95%), Pharma & Healthcare (10.16%), and Software (8.92%).

Requirements for new companies to be listed on DAX

Companies that desire to be included in the DAX must meet the following requirements:

1. Maintain a registered office in Germany
2. A free float of 10%
3. Traded continuously in Xetra
4. Proven to be highly-liquid

Compare Brokers Trading the German DAX

These are some brokers to trade DAX via CFD contracts:

Resources & Links:

• Deutsche Börse Group: » DAX Indices website
• DAX Options & Futures: » Put/Call Options Ratio
• Upcoming News: » News Calendar
• DAX Volatility: » Dax Volatility Overview
• Correlations with Money Markets: » Germany 10Y Govt Bonds | » Euribor Live Rates
• Correlations with Forex: Two important correlations, with the » US Dollar Index (USDX) and with the » USDJPY

■ DAX -The German DAX (Deutscher Aktien Index)

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